Going Out of Crowdfunding Bounds

How much money can a crowdfunding initiative raise?
More specifically, how high can this go? There’s probably a limit, right? What is it? These remain questions no one knows the answers to yet, although not knowing has hardly stopped people from speculating.

In July 2012, PC Magazine published an editorial of the opinion that Kickstarter tech projects are a bubble (Kickstarter seems to be the go-to crowdfunding platform that those in the media will point to to represent crowdfunding) which, much like the housing bubble that triggered the Great Recession, would soon burt. A piece arguing the same thing, except about a Kickstarter video game bubble, was presented at Gamasutra two months earlier. There has also been speculation that federal regulation will make crowdfunding illegal or impossible.

Meanwhile, singer Amanda Palmer utilized her close relationship with fans, her famous husband Neil Gaiman, her 2013-10-02 - blog 03semi-celebrity status, her “known” status as a musician who had already released albums and toured, and creative pre-order rewards to enact a Kickstarter campaign for a new album. A month later her funding goal had been blown through eleven times over. And she made it look easy.

On the other end, crowdfunding has been hailed as the beginning of the end for the traditional publisher-creator partnership. Novel authors Michael J. Sullivan and Bradley P. Beaulieu have both broken their publisher relationships and declared this is the end for publishers–the publishers just haven’t figured it out yet.

But like most “highly successful” crowdfunding campaigns, Palmer’s album topped out at a million dollars or so. Informal wisdom was that this was the most someone could ever hope for and then only if everything went really, really well.

Searching for the edge
In order to know where the edge was, it was important to figure out what the lay of the land was first. Who exactly is out there?
Kickstarter’s most successful projects (that this author is aware of) are:

  1. The Pebble e-Paper Watch ($10 million)
  2. The OUYA video game console ($8.5 million)
  3. The Veronica Mars movie ($5 million)
  4. Torment: Tides of Numenera video game ($4.1 million)
  5. Project Eternity video game ($3.9 million)
  6. Mighty No. 9 video game ($3.8 million)
  7. Reaper Miniatures Bones: An Evolution Of Gaming Miniatures ($3.4 million)
  8. Double Fine Adventure video game ($3.3 million)
  9. Wish I Was Here film ($3.1 million)
  10. FORM 1: An affordable, professional 3D printer ($2.9 million)

Indiegogo:

  1. Canary: The first smart home security device for everyone ($1.9 million)
  2. Let’s Build a @#$% Tesla Museum ($1.3 million)
  3. StickNFind- Bluetooth Powered ultra small Location Stickers (~$900,000)
  4. Lets Give Karen -The bus monitor- H Klein A Vacation! (~$700,000)

FundRazr:

  1. Sharecraft 2012 Feed the Children campaign ($1 million)
  2. Wikileaks legal defense fund 2011 ($368,300)

Most of the other entities in the crowdfunding this author could find were operating on the sub $1 million scale (examples: Sponsume, Funding Circle, GoFundMe, and Community Funded).

So it does look like Kickstarter has the most notoriety and the most success in terms of money raised. However, an Indiegogo project almost upended the status quo.

The Ubuntu Edge
On July 22, this year, after a short teaser campaign, Canonical announced the Ubuntu Edge. Canonical is the international corporation best known for Ubuntu, their free desktop variant of Linux. Ubuntu has tried for years to defeat Windows and Mac OS X in glorious battle–always failing in terms of who-is-winning-the-popularity-contest. Much like Microsoft has expanded Windows to tablets and phones, Ubuntu Edge was the same idea for Linux. If successful, 2013-10-02 - blog 01the exceedingly ambitious Indiegogo shindig was going to raise thirty-two million dollars, and usher in a new smartphone that had a completely different operating system going on under the hood: A new phone version of Ubuntu.

The phone had a number of advanced but out-there sounding features. Instead of normal phone glass, the Edge was going to be coated with glass made from sapphires (supposed to be much more scratch and fall resistant.) While cool, it added a lot to the cost. Also in the mix were a high-end processor, 4GB of RAM, 128GB of storage, a 720p display, and stereo speakers all just because it could. Many of these features were unlikely to make a phone user’s experience appreciably better, but were likely to drain the battery faster. Instead of being a traditional phone, the phone could work both as a phone and as a normal, albeit extra tiny, computer.

Crazy, yes? It sounded so, and all of this from a company that had never built a phone before, with an operating system no one in the public had gotten a chance to test drive yet. After rushing up to the $8 million mark, the campaign soon ran out of momentum. There it stayed until the final weeks, when Canonical began revising their pay structure, offering cheaper and cheaper payment options for the phone, which eventually dropped from the starting $800 to $655. It wasn’t enough. There were no takers on the $80,000 corporate pledge option until the campaign was almost over, at which point a single company pledged (perhaps symbolically?)

2013-10-02 - blog 02

Thus, the campaign did fail. However, it failed at an impressive $12.8 million pledged–still a crowdfunding record despite no money changing hands. Unlike many Indiegogo campaigns, Canonical had set things up so that if the campaign failed, they would not collect the money pledged and walk away. Instead, they had set it up so they got a more honorable nothing

Was it a publicity stunt? In some ways, probably. CEO Mark Shuttleworth told the BBC that, “we would have been bringing the future forward a year or two at least.” Others had suggested Shuttleworth was having difficulty finding phone building partner companies who would take Canonical seriously. That $12 million probably helped open some doors.

And Canonical is still going ahead with Ubuntu for phones, just without making the phones themselves. The awareness and demand for Ubuntu phones is likely much increased from their failed Indiegogo campaign, no small feat in a market dominated by Apple’s iOS and Google’s Android (also a linux variant, although a locked down version).

2013-10-02 - blog 04Mark Shuttleworth

For now, the crowdfunding standard a successful project can expect to raise does seem to stand at about $1 million–creeping up to $3 million on Kickstarter. But the record stands at 12.8 times that. Sort of.

So far, though, the numbers look like they are trending ever higher. If an obscure phone project can raise that much money, the future looks interesting.

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